Reports & Analysis

The end of the work of Iranian traders in Bainance; Where is the next destination?

Bainance Digital Currency Exchange announced last Friday that all users are required to go through the process of authentication and provide identification documents to use the facilities of this exchange, which can be said to mean the end of the work of Iranian traders in the largest Exchange is the digital currency of the world.

Dedicated Digital Currency – According to the official website of Bainance, from now on, all users must use “Intermediate” level authentication to use the facilities of this exchange, including depositing, withdrawing and trading digital currencies. These conditions will apply immediately to new users and to users who already have accounts in this exchange, until October 19 (October 27).

It should be noted that mid-level Bainance authentication includes the presentation of identity documents, including ID cards, and identity information related to Iran is not accepted by this exchange.

According to Bainance, current users who have not gone through the authentication process will only be able to withdraw their digital currencies and transfer them to another wallet. Bainance intends to gradually apply these restrictions to its current users, so that by October 19 (October 27) all accounts in this exchange will operate under the new rules.

Bainance asked its users to authenticate their account at the earliest opportunity so as not to face restrictions. According to the exchange, new orders will be closed for all orders and trading positions of unauthorized accounts.

Most Iranian traders use Bainance to buy and sell digital currencies. As residents of Iran will not be able to complete the authentication process due to sanctions, they will no longer be able to buy and sell digital currency at this exchange.

Despite pressure from international lawmakers on Bainance in recent months, it was not far-fetched for the exchange to make such a decision. With increasing pressure from regulators, Bainance gradually restricted its activities and eventually decided to require authentication and identification for all its users.

But how did this process begin and what will be the consequences of Bainance’s decision for Iranian traders?

Where did the Bainance restrictions begin?

The end of the work of Iranian traders in Bainance;  Where is the next destination?

For several months now, financial regulators around the world have been monitoring Binance activities. Bainance has been repeatedly warned by regulators during this period and in some cases has even been forced to restrict or suspend its activities in some countries.

These legal pressures are due to unlicensed activities in countries around the world. In most cases, financial regulators have warned Bainance that it must obtain a license to operate and comply with anti-money laundering and anti-financial crime regulations. Faced with a huge wave of opposition from the legislature, Bainance decided to bring its activities into line with international law.

Bainance’s first step in complying with international regulations was to work with Blockchain Analysis (CypherTrace). The exchange announced about two months ago that it intends to use the Cifferris transaction information transfer solution. This technical solution will help Bainance align its activities with the Financial Action Task Force (FATF) law and prevent money laundering and terrorist financing with digital currencies.

Supervisors around the world have repeatedly warned Bainance of a lack of financial reporting and customer authentication legislation. Bainance, too, wanted to get rid of the legal pressure as soon as possible, and decided to encourage its users to go through the authentication process by lowering the withdrawal limit for unauthorized accounts. Less than a month ago, the exchange announced that it had reduced the daily withdrawal limit for unidentified users from 2 bitcoins to 0.06 bitcoins, and the limit is set to be between August 4 and 23 (August 13 to September 1) for all Users apply.

Reducing its daily withdrawal ceiling alone would have limited the activity of Iranian users, however, as Iranian traders could continue to operate in the exchange to some extent.

As previously reported by Digital Currency, Bainance announced after lowering its daily withdrawal limit that it was possible that in the future the withdrawal limit for users who have not completed the authentication process will change, so it was not far-fetched that This exchange wants to impose new restrictions.

Bainance fired a shot last Friday, announcing that all users must now go through the authentication process to use the exchange’s facilities, a decision that marks the end of the work of Iranian traders in the world’s largest digital currency exchange.

Now Iranian traders must look for alternatives to continue their activity in the digital currency market. Some offer foreign exchange offices where Iranians can operate, some think of trading in domestic exchange offices, and some consider decentralized exchange offices as an alternative.

But why should Iranian traders look for an alternative to Bainance, and what options do they have?

Where is the next destination of Iranian users?

As mentioned earlier, most Iranian digital currency traders operate in this exchange because of their relative trust in Bainance. In addition, the significant volume of transactions and the vast market of Bainance have made it impossible for other digital currency exchanges to compete with it.

Now, however, despite restrictions to be imposed by the end of October this year, Iranian Bainance users, the vast majority of whom have not been authenticated and who do not have the conditions for authentication due to sanctions, will have to choose another place to continue their transactions.

In the short time since the news broke, Iranian traders have been looking for an alternative to Bainance and have introduced options. In general, 3 options have been proposed by Iranian traders; Foreign exchange offices where authentication is not required and accept Iranian users, domestic exchange offices and decentralized exchange offices.

The end of the work of Iranian traders in Bainance;  Where is the next destination?

According to opinion polls, KuCoin and CoinEx exchanges are among the main options for Iranian traders to replace Bainance. Both exchanges operate in Hong Kong and are not currently required to be authenticated. The main difference between the two exchanges is that Quinx authenticates Iranian users and has no problem with IP addresses related to Iran, but Coquin does not specifically accept users from Iran and does not accept phone numbers and identification documents related to Iran. The activity of Iranian users in the Cocaine exchange is something similar to the binance conditions before authentication became mandatory. However, as the results of the polls show, it seems that Cocaine Exchange is more popular among Iranian traders due to its higher volume of transactions than Quinx.

Although many Iranian traders now use the Quinx exchange, many experts believe that the exchange is unreliable and may cause “trouble” for Iranian traders in the future. For the reason of their belief, they point to the uncertainty of the location of this exchange and the identity of the operators, as well as the provision of unreasonable services to users living in Iran (as a sanctioned country).

The end of the work of Iranian traders in Bainance;  Where is the next destination?

Another option suggested by Iranian traders is to use decentralized exchanges. These platforms are basically decentralized and unreliable and the transaction does not require authentication. Decentralized exchanges, however, have limitations that make them less attractive to traders; These include relatively high fees and the fact that most of these platforms do not support digital currency derivatives trading.

Using internal exchanges is another option suggested by users. Until now, Iranian traders have mostly used domestic exchange offices to liquidate assets or buy digital currency in Rials. Now, however, some people who no longer trust foreign exchanges prefer to pursue their transactions in domestic exchanges. According to experts, the low volume of transactions on domestic platforms and the lack of support for derivatives trading are among the reasons why this option is not very popular.

Finally, Bainance’s decision to require user authentication has forced Iranian traders to relocate, and since sanctioned countries are not allowed to authenticate in Bainance, Iranian users are forced to leave the exchange.

It remains to be seen which Iranian traders will ultimately trust the most; Investors who, after years of operating in the digital currency market, still face widespread constraints on their choice of platform.


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